Appraisal of the factors contributing to European small and medium enterprises innovation performance

Abstract

Small and Medium Enterprises (SMEs) play a vital role in driving job creation and Gross Domestic Product (GDP) growth in all economies worldwide. Their increasing importance also means that they must be innovative enough to survive and be sustainable, improve their productivity and competitiveness. It is pertinent for European SMEs to know the contributing factors driving their innovations, which will enable them to channel their limited resources to ensure they achieve their innovation goals. This paper examined the various factors that stimulate innovations within SMEs. Using the ordinary least squares regression analysis and data from the European Innovation Survey, the authors analyzed 296 European SMEs between 2011 and 2018. The results show that intellectual assets, financial support, firm investment, and human resources all significantly contribute to firm’s sales output across Europe. Conversely, it was found that financial support and innovation linkages were not significant predictors of firms’ innovations. The results are important for SMEs managers who are aiming to be innovative and improve their productivity. The study can serve as a practical guide on how SMEs can ameliorate their innovation potentials and activities. © Michael Amponsah Odei, Petr Novak, 2020.